Financial Strategies

Your ‘red zone’ may impact your portfolio


Broncos fans are still mourning the season but the Super Bowl will happen, nonetheless. Whether you are focused on the plays, commercials or the inevitable party, I can’t help but tie in a few investment analogies as well.

While the red zone in the football game is a good thing for the offense, it could mean something totally different in a life analogy. The “retirement red zone” refers to the five years before and last five years into retirement. This is a period of time when poor investment decisions or a misaligned portfolio can be the most detrimental to your overall retirement.

Early investors will likely have a better time of navigating the red zone if they have faithfully invested most of their adult lives and experienced decades of compounding. For the late starters, who did not get around to saving 10 percent to 15 percent per year towards retirement, the first few years without a paycheck can be stressful. First because you don’t have the experience of riding out many different market cycles, and second because a short-term reaction could have a long-term impact that is virtually impossible to recover from. When you add market volatility to the equation, you can get further and further away from the end zone.

Every financial plan should cover the key risks for any goal, but especially retirement, since it is the most expensive and longest lasting goal you will likely have. These perils include market volatility, health care costs, inflation and outliving your money. You should also consider that early retirement can cause you to spend more on travel, home improvements or doing things you never had time for while you were working. These large-ticket items also come with an inflation factor that is usually higher than the Consumer Price Index. This is important since investment returns and Social Security all mimic economic growth and inflation. Therefore, your income may not be keeping up with your expenses.

Late retirement can also be very expensive, not only due to health care costs, but just the inability to do your own home maintenance. When you hire labor, be prepared for sticker shock.

Mid-retirement is usually the least expensive, when you are not traveling as much but are still healthy. Unfortunately, this middle stage is what most retirement projections are based on, when the more expensive tails are typically what breaks a retirement plan. Imagine if one of these tails occurs during a recession or market correction.

The most important tail is the first phase of retirement, or the red zone. This is planning and deciding when to retire, determining how much you need to live on and what your assets and resources are to last your lifetime. The decisions you make in this phase are most crucial since you still have 30-40 years of life to fund along with many unknown factors that could derail any plan.

This is one of the main reasons it is important to plan prior to retirement. Learn how Social Security and Medicare work, and if you will need income from your portfolio. If you have no choice but to take income from your portfolio, and you have negative returns, you are experiencing negative compounding.

The number one detriment we see in retirement planning is the inability to determine what your expenses will be. This is one of the crucial parts of planning for your “red zone.” The number two detriment we see is being too conservative too early. This chokes off potential growth that is needed for decades of inflation and unknown variables. Make certain you are designing your retirement strategy with all of these factors in mind.

Then you can look forward to the “red zone,” and on Super Bowl Sunday, the end zone!

Patricia Kummer has been a Certified Financial Planner and a fiduciary for over 30 years and is managing director for Mariner Wealth Advisors., a Registered Investment Adviser with its physical place of business in the State of Colorado. Registration of an investment adviser does not imply a certain level of skill or training. Please visit for more information or refer to the Investment Adviser Public Disclosure website ( Any material discussed is meant for informational purposes only and not a substitute for individual advice. The opinions are based on information and sources of information deemed to be reliable, but the author does not warrant the accuracy of the information that this opinion is based upon. Securities offered through MSEC, LLC, Member FINRA & SIPC, 5700 W. 112th St., Suite 500, Overland Park, KS 66211.

Patricia Kummer


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